As European institutions expand their tokenisation efforts, firms face growing complexity around the application of MiFID II and MiCA, according to distributed ledger technology provider Axiology.
The company notes that tokenised securities remain subject to MiFID II, while certain crypto-assets fall under MiCA. Hybrid assets can create classification challenges, potentially exposing firms to compliance risks if they are assessed under the wrong framework.
Legacy infrastructure concerns
Axiology also points to operational challenges as institutions decide whether to build tokenisation capabilities internally or rely on specialist providers.
“Many institutions are currently trying to bolt tokenisation onto legacy infrastructure that was never designed for digital assets,” says founder and CEO Marius Jurgilas. According to the company, this can lead to fragmented custody arrangements, duplicated compliance processes and operational inefficiencies.
“The industry is now moving beyond proof-of-concept projects,” Jurgilas adds, arguing that institutions are increasingly focused on how tokenised assets can operate at scale within existing capital markets.
